The govt emphasises economic and institutional reforms in the plan, says Mustapa
by RAHIMI YUNUS / pic BERNAMA
THE 12th Malaysia Plan (12MP) will be designed to push Malaysia up in the global value chain with higher technology to promote growth that is more sustainable.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed (picture) said several new economic sectors will be identified to drive the economy forward, including the development of high potential industries such as aerospace, advanced electrical and electronics, halal, creative industry, and biomass and smart farming.
“We need to move up the value chain; adopt technology and innovation to enhance economic growth; and develop an inclusive society to ensure social justice and improve the wellbeing of the rakyat,” Mustapa said in a webinar organised by the Malaysian Economic Association yesterday.
He further said the 12MP will be formulated to boost environmental sustainability by implementing a green and resilient economic agenda, while also improving the efficiency of the delivery system to be more people-centric, efficient and productive.
The minister also said the government is emphasising the issue of economic and institutional reforms, while making the sustainability agenda to be more explicit in the national development plan.
Economists viewed that Malaysia needs to get away from a race-based economic model and embrace a needs-based strategy in the 12MP to reshape the economy and catch up with other advanced nations.
Royal Selangor International Sdn Bhd chairman Tan Sri Yong Poh Kon said the age-old policy of having 30% equity shares for Malays and Bumiputera, 40% for non-Bumiputera and 30% for foreigners under the New Economic Policy (NEP) has been costing the nation hundreds of billions of foreign direct investment (FDI) over the years.
With such an equity target policy, he said the NEP leads to some form of ownership and control of the corporate sector that is not favourable to investors.
As a comparison, he said Singa- pore can have a higher per capita income and inward FDI that its citizens account for only 10% to 12% of the equity, while foreigners hold the majority.
He said within 24 years from 1980 to 2004, the cumulative difference in FDI between Malaysia and Singapore was over RM358 billion.
“The country needs to move away from the preoccupation with ownership of share capital. Success is not ownership per se, but the capacity to create, maintain and grow productive assets,” Yong said in the webinar yesterday.
He said the 12MP must be bold to introduce measures to control utilisation of foreign labour via a more market-oriented levy system with incentives.
He also said improving the education system is critical to prepare the country with the right talent while the country reduces reliance on cheap foreign labour.
Economist Tan Sri Dr Sulaiman Mahbob said the 12MP needs a concrete market-based solution to the growth and equity as a long- term political-economic calculus of the nation.
Sulaiman highlighted three long-term concerns that the 12MP should tackle, which are the structure of macroeconomics, total factor productivity (TFP) and economic growth and equity. The Bumiputera ownership declined to 16% after achieving about 25% earlier, he noted.
He said Bumiputera only owned 2% of urban commercial land parcels at present, adding that the Orang Asli community has been left behind a little too long.
Sulaiman said the 12MP should consist of a long-term outline perspective plan (OPP) to take Malaysia out from the middle-income trap.
“OPP should address four concerns: Structural constraints, labour productivity, export potential of our services sector and the issue of distributive justice,” Sulaiman said in the webinar.
On the supply side, he said Malaysia’s manufacturing is facing premature deindustrialisation, while the services sectors remain traditional.
He said Malaysia must aim for a TFP level of 50% similar to developed countries, which stands between 50% and 70%. Malaysia’s TFP is estimated to increase to 39.6% during the 2016 to 2020 period.
The 12MP will be tabled next year as a continuation of the post-2020 development plan. It will be aligned with the shared prosperity initiative encompassing three dimensions, namely economic empowerment, environmental sustainability and social re-engineering.